Government grants, or any grants for that matter, are probably one of the most sought after resource by business owners.
Grants are essentially free business capital (free money that does not have to be paid back) and, if acquired, can go along way in providing needed resources to help businesses with immediate cash flow issues or to attract and win new business.
But, these grants, especially government grants, are extremely hard to get unless your business is tax exempt or a non-profit organization.
You hear this from nearly every expert or official on the planet – from Business.gov to SCORE and even from the Small Business Administration (SBA); who constantly state that there are no grants programs for ‘for-profit’ businesses – the government (federal, state or local) does not provide grants directly to businesses to either start-up that business or to cover operating expenses.
And, for the most part this is very true. The government does not usually provide grant funds directly to businesses. But, businesses can access these funds in an indirect manner as most grant funding is allocated to government entities (federal, state and local) for distribution within their local areas.
Take an example of the federal transportation grants as part of the recent stimulus package. Let’s say your city wants to purchase new buses for public transportation. Your city can apply for these stimulus grants to get the funding to purchase the new buses. The federal government agrees with your city and prepares to send the funding but stipulates that any purchase with these funds has to comply with the new emission standards – meaning the buses have to be green.
Now, when your city receives the grant funds, it has to go to a non-government company / manufacturer to purchase these vehicles as no government entity manufactures buses.
Your city officials will request bids from local and national transportation manufacturers outlining the emission standards that need to be met as well as their process for accepting bids.
If your company can meet those standards and win the bid, your company will essentially indirectly access those federal grant funds.
Keep in mind that your city, county, state or even federal governmental departments use grant funds to make all types of purchases from durables goods like buses, computers and office furniture to services like building construction, road maintenance and in-house child care; just to name a few.
To find out what type of grant programs your local and state governments are requesting bids for, simply call your mayor’s office, county administration offices, state governor’s office or visit your local chamber of commerce and ask about their community development grant or other grant programs.
All of these groups can point you to the right information for your local or state area.
I have seen numerous businesses actually start new companies just to bid on and fulfill these grants request.
Think about it. Your local government is struggling to revitalize your local downtown area and has solicited a grant to redesign the entire area in hopes of bringing in more businesses as well as more of the spending public. For this redesign your city officials are requesting bids for all types of services from urban planning and architecture to actual construction and landscaping for both buildings and parking area.
Now, let’s say that you are thinking about entering the green business industry and want to create a company around this new idea. You quickly form a company and submit a bid to the city to design and build new green area within the downtown area to include the top of all government offices. If you win the bid, you have then indirectly accessed government or federal grant money.
Additionally, even if there are no grants already allocated to / for a product or service your business provides, you can always submit a white paper to your local grant authority outlining the benefits of your products or services.
If they agree that your products are something the area, region or state needs, then they can solicit federal grant funds on your behalf. They apply for and receive the grant funds then in turn purchase your offerings. You just have to sell them on the benefits of your products and services.
Lastly, keep in mind that these federal or state grants are not open funds to help you just start any business you want or to cover your operating costs or losses – the entities that distribute these funds must receive something in return – either some product or service they need or products or services that will benefit the community at large.
Just because you or your business may not be able to directly obtain federal or state grants it does not mean you can’t get your hands on those funds. You just have to understand the rules of these grants as well as be willing to go out and either win these bids or sell yourself and your business to these granting entities – educating them on how your company can help them and those in your communities.
Joseph Lizio holds a MBA in Finance and Entrepreneurship, is the founder of Business Money Today, has a strong commercial lending background and is regarded as an expert in business and finance – specifically business loans and working capital.
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